In almost all business process outsourcing transactions it is virtually impossible for one service provider to perform all of the services required. So subcontractors become fundamental to the delivery of the services. Here’s our list of some key issues to manage when dealing with subcontractors. 

1. One Throat to Choke.
Or perhaps more politely, one hand to shake. Remember that whether your deal involves one subcontractor or a consortium of them, the customer will insist on the prime contractor remaining liable for performing all of the obligations under the outsourcing contract, regardless of whether some of the obligations have been . . . [more]

Services outsourcings and software-as-a-service (SaaS) offerings lie on nearly opposite ends of a spectrum of managed services that a service provider can provide a customer. Traditionally, they serve the customer in quite different ways and are considered to be separate services, but some service providers are offering “customized” SaaS services, which in essence lie in the middle of this spectrum of managed services. Only certain services can be offered both as a SaaS Service and through an outsourcing, but the breadth and complexity of SaaS Services, particular cloud-based SaaS Services, grows constantly.

Outsourcings are generally used to transfer responsibility for . . . [more]

My previous posting examined three issues relating to confidentiality obligations in an outsourcing agreement where care and attention may be needed to ensure that the parties achieve the results they are intending. I want to continue along the same path in today’s posting, looking at four more issues relating to confidentiality obligations in outsourcing agreements that the customer or the service provider do not always get right. 

4. Restrictions on the disclosure and use of Confidential Information

Confidentiality obligations frequently limit the ability of a party to use or disclose the confidential information of the other party in terms similar . . . [more]

Multi-country outsourcing means customer engages supplier to deliver outsourcing services to its affiliated entities in various jurisdictions. Structuring and negotiating a long-lasting outsourcing relationship require the parties to effectively manage many risks. Multi-country outsourcing deals multiple the challenges.

There are different ways to structure a multi-country outsourcing relationship. The most commonly used approach is to have a framework agreement between the two principal entities and local agreement between local entities of the two organizations. The terms and conditions in the framework agreement will flow to the local entities except to the extent they have been modified in the local agreement. . . . [more]

The typical outsourcing involves the outsourcing of not only a business function, but also the technological infrastructure to support it. When preparing an outsourcing agreement, the hardware, software and systems of each party to the outsourcing need to be carefully considered and well understood. It should be part of the due diligence of embarking on the outsourcing process.

Most companies that are looking to outsource will already have in-house technical expertise. This in-house expertise should be relied upon to map out a company’s technical capabilities and limitations. This will set the stage for properly mapping the technical requirements for the . . . [more]

Confidentiality obligations are a fundamental part of all outsourcing agreements. As part of an outsourcing transaction, the customer and the service provider each agree to make Confidential Information available to the other but subject, in each case, to the limitations on use, disclosure and retention that are agreed to in the contract. Unfortunately, customers and service providers don’t always get it right and the parties sometimes find, after signing the agreement, that information intended to be kept confidential need not be or that information intended to be freely available is subject to unwelcome restrictions that limit its usability. In this . . . [more]

Linking Service Descriptions to the Economic Model

It is trite to say that in any outsourcing transaction, the service description is critical to the deal. The services are, after all, the essence of the outsourcing regardless of the impetus for doing the outsourcing in the first place (such as cost reduction, technology improvement, business transformation, and so on). The service descriptions are used to establish the framework for the economic model and the base fees that will have to be paid by the business owner. These service descriptions are key for establishing what the service provider must do for the . . . [more]

I was speaking with a colleague recently regarding whether mediation was a valuable tool in outsourcings, and if so, under what circumstances. We came to the conclusion that it is an appropriate tool for some outsourcings, but not all. 

It is inevitable in any outsourcing or large managed services arrangement that disputes will arise. Disputes arise for a myriad of reasons, ranging from a failure of the parties to appreciate and agree on fundamental business terms, such as differences of opinion on specifications or deliverables, to perhaps the more mundane question of whether a notice required by the agreement was . . . [more]

The provisions of outsourcing agreements relating to employees have grown more complicated. There was time, in the early 1990s, when the obligations of the service provider under the Outsourcing Agreement focussed almost exclusively on describing in detail the services to be performed. There was little mention of the service provider employees used to perform the services (or privacy, software or subcontractors for that matter). The times have changed however: in my experience at least, it is now customary for outsourcing agreements to include extensive provisions relating to the personnel used by the service provider to perform the services.

In this . . . [more]

I recently had the opportunity to ask some of my clients a few questions about their outsourcing deals. The following is based on those discussions…

1. What is one of the biggest challenges you faced at the procurement stage of an outsourcing and how did you manage that challenge?

Procurement of long-term, high-value outsourcing contracts is complex. You need to be able to negotiate appropriate risk transfer, service levels and pricing, while maintaining competitive tension between vendors bidding for the work. It is not as simple as firing off an RFP with pre-defined services and waiting for a crate of . . . [more]

I tend to live in the future. I think about what it will be like when I’ve paid off all my debts, how I’m going to celebrate a significant event coming up next year, and what my next job will look like. So last December, when the legal outsourcing firm Integreon announced the first “Shared Information Service”, or outsourced law library services, I was very intrigued. At the time, I remember thinking, “how are they going to do this?” I can understand outsourcing research (be it legal, business development or competitive intelligence), but how do you outsource the physical . . . [more]

In any outsourcing or other large contracting arrangements, one of the principal challenges is developing good lines of communication with the client. Whether one is acting as corporate counsel, or outside counsel, it can be a challenge sometimes to explain legal problems and manage expectations to deliver the best advice possible to the client. To manage this concern, I have adopted some strategies which have proven helpful. 

Develop a process. Having a clear process in place for communicating and decision making on a deal is crucial. I have always been fortunate in that regard, as my clients are often